BATON ROUGE -- Facing skeptical legislators, Louisiana State University System officials Monday defended plans for an academic medical center in New Orleans they frame not as the old safety-net model of Charity Hospital but as an elite facility that would draw patients from across the Gulf Coast.

View full sizeDavid Grunfeld, The Times-PicayuneGov. Bobby Jindal has announced that site preparation and early construction should begin even as the UMC board navigates how to finance the rest of the project beyond the $700 million-plus cash the state has committed.

But to yield that result, LSU administrator Dr. Fred Cerise told the House Appropriations Committee, University Medical Center must be 424 beds or larger. And, LSU officials said, lawmakers should not blanch at the prospect of steering as much as $100 million annually to support the facility.

House Appropriations Chairman Jim Fannin, D-Jonesboro, remained skeptical about the financial projections for the project, and he elicited a promise from UMC Board Chairman Bobby Yarborough that the governing board -- an independent entity that includes appointees of LSU, Tulane University and other New Orleans schools -- would present lawmakers a final business plan for the hospital by Labor Day. That plan essentially will set in stone how large the hospital will be and what kind of services it will offer.

"To not have a business plan after four years is ridiculous," Fannin said. "We have had a lot of motion (with the hospital project) and not much action."

Fannin called the meeting to hear from hospital, university and state officials on the heels of a recent consultant's report that said the 424-bed plan is too large for the existing health care market in New Orleans. LSU has issued a detailed rebuttal of many of the assumptions in the Kaufman Hall & Associates analysis. The Illinois firm is currently reconsidering the matter and is expected to issue final projections sometime before the UMC board's June 2 meeting.

Cranes in the sky

Legislators do not have a direct role in approving the business plan, but the Joint Legislative Committee on the Budget -- the combined appropriating committees of both chambers -- has leverage because it must give the go-ahead to the state facilities office on construction. The same panel also must approve a contract for the state to purchase health care services for state prisoners and the uninsured. That deal must be drafted before final construction can begin.

Jerry Jones, the state facilities chief whose office is responsible for construction of the hospital, told Fannin he is ready to begin site preparation and utilities work as early as June. The state already has between $700 million and $800 million obligated to the project. That is enough, Jones said, to build the patient towers, a diagnostics and treatment building, and one parking deck. The rest could come either from bonds or -- perhaps more likely at this point -- third-party investors who would finance the additional $400 million or so for the clinics and medical office building and second parking deck. The developer would then lease those facilities to the UMC board for its use.

Yarborough said after the meeting that Jones' desired schedule will not affect the board's consideration of a final business model and financing plan, even if it means that Fannin and lawmakers use their leverage to delay the project. "We're going to do our part to fulfill our fiduciary responsibility," he said.

Filling the beds

LSU administrators, meanwhile, emphasized that dickering over construction logistics is not the most important consequence of the debate over the size and scope of the hospital. Rather, Cerise said, the state must build a hospital large enough to support a true academic medical center. That means having enough beds to fulfill the safety-net mission and to have space to admit more insured patients who would be attracted to quality services provided by LSU faculty physicians. That, in turn, provides the learning environment to educate physicians who then become anchors of Louisiana's health care infrastructure for generations to come.

Interim LSU Public Hospital currently has 275 beds that Cerise said are consistently at 90 percent capacity or above. The 38 psychiatric beds, he said, are always full. LSU faculty, Cerise said, now must send most insured patients to other facilities. One of the key differences in the initial Kaufman Hall assumptions and LSU's projections is how many of those commercially insured patients -- to say nothing of newly insured Medicaid patients covered by the 2014 expansion under the new federal health care law -- would actually end up at the new hospital.

That question becomes moot if the hospital is too small, Cerise said, because there would be no space for anything other than the traditional patient base that Charity Hospital and Interim LSU Public Hospital have always served.

"If we aren't willing to build 450 or 500 beds, then you're basically making the argument that we shouldn't build it at all," LSU System President John Lombardi said after the meeting.

As for projections of $100 million in annual state general fund support, Lombardi and Cerise stressed that the state already steers money to Interim LSU Public Hospital and would end up paying similar amounts in the future if the model is not changed.

The state will always have to pay to care for prisoners, Lombardi said, and it will pay in some form for care to the uninsured and the under-insured, whether that means funneling money to a new state hospital or paying private and community hospitals to pick up that portion of the market. "That piece of (the debate) really should be off the table at this point," Lombardi said.